Robinhood Markets (HOOD) Plummets 2.05% Amid Regulatory Scrutiny and Crypto Volatility – What’s Next?

Summary
• Robinhood’s stock plunges 2.05% to $117.77, breaking below its 52-week low of $29.66
• Intraday range of $116.61–$120.88 highlights sharp sell-off amid sector-wide jitters
• Options chain shows elevated implied volatility (up to 123.58%) and heavy put buying

Robinhood Markets (HOOD) faces a sharp intraday selloff, dropping 2.05% to $117.77 as regulatory uncertainty and cybersecurity concerns weigh on investor sentiment. The stock’s 52-week low of $29.66 looms as a critical support level, while the broader broker-dealer sector reacts to SEC guidance on crypto custody and a spate of data breaches at peers. With options volatility spiking and leveraged ETFs like HODU (-3.53%) amplifying the downturn, traders are recalibrating positions ahead of key technical and regulatory triggers.

Regulatory Uncertainty and Cybersecurity Concerns Weigh on Robinhood
The selloff in HOOD is driven by two key factors: the SEC’s non-binding guidance on crypto custody and a wave of cybersecurity incidents at broker-dealer peers. The SEC’s December 17, 2025, statement on crypto asset custody—while not a safe harbor—has created ambiguity for firms like Robinhood, which rely heavily on digital assets for revenue. Simultaneously, LPL Financial and Ameriprise reported phishing attacks affecting hundreds of clients, raising fears of similar vulnerabilities at Robinhood. These developments have spooked investors, particularly as Robinhood’s 52-week low of $29.66 and 200-day moving average ($100.005) suggest a bearish technical backdrop.

Broker-Dealer Sector Volatile as SCHW Slides 1.2%
The broader broker-dealer sector is under pressure, with The Charles Schwab (SCHW) down 1.1959% as investors reassess risk. Robinhood’s 2.05% drop outpaces the sector, reflecting its higher exposure to crypto and regulatory scrutiny. Leveraged ETFs like HODU (-3.53%) and HOOW (-1.99%) amplify the sell-off, while the Direxion Daily HOOD Bull 2X ETF (-3.53%) signals aggressive short-term bearishness. The sector’s vulnerability is underscored by the SEC’s crypto custody guidance and the recent data breaches at LPL and Ameriprise.

Options Playbook: Puts and Leverage ETFs for a Bearish HOOD
• RSI: 46.75 (oversold)
• MACD: -1.85 (bearish divergence)
• Bollinger Bands: Price at 117.77 (below middle band of 118.08)
• 200-day MA: 100.005 (far below current price)
• Support/Resistance: 30D support at 115.02, 200D support at 114.61

Robinhood’s technicals and fundamentals align with a bearish setup. The stock is trading below its 200-day MA and key support levels, with RSI near oversold territory. The Direxion Daily HOOD Bull 2X ETF (HODU) and Roundhill HOOW ETF (-3.53% and -1.99%) offer leveraged exposure to the downturn. For options, two contracts stand out:

• HOOD20260123P107 (Put, Strike: $107, Expiry: 2026-01-23):
- IV: 53.05% (moderate)
- Leverage Ratio: 156.20% (high)
- Delta: -0.138 (moderate sensitivity)
- Theta: -0.0426 (moderate time decay)
- Gamma: 0.0214 (high sensitivity to price moves)
- Turnover: 3,299 (liquid)
- Payoff (5% downside): $10.20 (max(0, 107 - 112.13))
This put offers high leverage and liquidity, ideal for a 5% downside scenario.

• HOOD20260123P109 (Put, Strike: $109, Expiry: 2026-01-23):
- IV: 52.45% (moderate)
- Leverage Ratio: 107.48% (high)
- Delta: -0.1875 (moderate sensitivity)
- Theta: -0.0405 (moderate time decay)
- Gamma: 0.0265 (high sensitivity to price moves)
- Turnover: 1,735 (liquid)
- Payoff (5% downside): $12.13 (max(0, 109 - 112.13))
This put balances leverage and liquidity, with a higher strike for a more aggressive bearish play.

Action: Aggressive bears should prioritize HOOD20260123P107 for its high leverage and liquidity. Watch for a breakdown below $116.61 or regulatory updates.

Backtest Robinhood Markets Stock Performance
The backtest of HOOD's performance after a -2% intraday plunge from 2022 to the present shows favorable results. The 3-Day win rate is 56.95%, the 10-Day win rate is 62.25%, and the 30-Day win rate is 65.96%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 26.94% over 30 days, suggesting that HOOD has the potential for significant gains following the intraday plunge.

Act Now: HOOD at Pivotal Level – Short-Term Bearish Setup
Robinhood’s 2.05% drop signals a critical juncture for the stock, with technical and regulatory headwinds aligning. The 52-week low of $29.66 and 200-day MA at $100.005 remain key targets, while the sector’s reaction to the SEC’s crypto custody guidance and cybersecurity incidents adds near-term risk. Traders should monitor the 30D support at $115.02 and 200D support at $114.61 for potential entry points. The sector leader, The Charles Schwab (SCHW), is down 1.1959%, underscoring broader market jitters. Act now: Short HOOD with puts like HOOD20260123P107 or leveraged ETFs like HODU (-3.53%) if the stock breaks below $116.61.